A decline in the price level on the real estate market can be observed nationwide, but this is particularly pronounced in eastern Germany. Interested parties who are looking for attractive investment opportunities should therefore consider investments in up-and-coming East German cities.
Real estate prices in Germany fall
For the first time in more than ten years, falling prices on the real estate market in Germany have been observed in recent months. For example, the Europace house price index for Germany has been falling since mid-2022. Since the previous long-term boom in the real estate market was primarily supported by low interest rates, higher interest rates, high construction costs and rampant inflation are now weighing on demand.
Stronger price decline in East Germany
Even if a price decline can be observed on the real estate market throughout Germany, this varies from region to region. In a nationwide comparison, the development can be observed especially in the east of the republic, as a press release from immowelt shows. While prices in some East German cities such as Berlin, Dresden and Erfurt continue to rise due to the continued high demand, properties in rural areas are particularly affected by the price decline.
Leipzig and Halle are booming
According to immowelt, small price corrections can also be seen for real estate in the cities of Halle and Leipzig. Nonetheless, investors should not underestimate the potential of these cities. Leipzig in particular is considered a hip city and is currently the fastest growing city in Germany. Attractive location conditions, such as a diverse job market, lead to an increasing demand for living space in Leipzig. Börse Online forecasts the greatest housing shortage for Leipzig up to 2035, citing data from Empirica. This trend, coupled with currently comparatively low real estate prices compared to other major German cities, suggests attractive investment opportunities for investors, according to Börse Online.
Not far from Leipzig, a rapidly increasing demand for living space can also be observed in Halle. Halle has successfully reduced its own dependency on the previously dominant coal industry and has been able to attract attractive employers such as Coca-Cola or Ebay to the region. As reported by Börse Online, the population of Halle has grown by three percent since 2010 and seven percent more jobs have been created. Even if Halle is often seen as Leipzig’s little sister, the city could therefore offer interesting opportunities for real estate investments due to the current low price level and the associated base effect.
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